Stock market glossary
Indian stock market and investing terms in plain words: what each one means and how it works in India.
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- Demat AccountA demat account is an electronic account that holds an investor's shares, bonds, ETFs and mutual fund units in digital form instead of paper certificates.
- DIIDII means Indian institutions such as mutual funds, insurers, banks and pension funds that invest large pooled sums in Indian markets.
- DividendA dividend is a part of a company's profit that the board decides to pay to shareholders, usually in cash, in proportion to the shares held.
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- EBITDAEBITDA is the operating profit of a company before interest, income tax, depreciation and amortisation are deducted from it.
- ETFAn exchange traded fund is a mutual fund scheme with units listed on a stock exchange, built to follow an index or an asset such as gold.
- Expiry DayThe last day on which a futures or options contract trades, after which open positions are settled in cash at a final price set by the exchange.
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- FII and FPIA foreign portfolio investor (FPI) is an overseas entity registered with SEBI that buys Indian shares and bonds for returns without taking control.
- Free FloatFree float is the part of a listed company's shares that the public can freely buy and sell on the exchange, excluding promoter and government holdings.
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- Index FundAn open ended mutual fund that holds the securities of a market index, such as the Nifty 50, in the same weights, so its returns stay close to that index.
- IPOA company's first offer of its shares to the public, after which the shares are listed on a stock exchange and can be bought or sold by any investor.
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- Nifty 50The NSE's main stock index, which tracks 50 large, actively traded companies and weights each by the market value of its publicly tradable shares.
- NSE (National Stock Exchange)A regulated electronic marketplace in Mumbai where buyers and sellers trade shares and other securities at publicly visible prices.